If Expenses Are Classified into the Groups, Cost of Sales

question 9

Multiple Choice

If expenses are classified into the groups, cost of sales, selling expenses, administrative expenses and finance expenses, under IAS 1/AASB 101 they are classified by:

• A) nature.
• B) function.
• C) liquidity.
• D) tangibility.

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Definitions:

Machine Hours

The total operating time of a machine, used as a basis for allocating manufacturing overhead.

Conversion Costs

Costs incurred to convert raw materials into finished products, generally including direct labor and manufacturing overhead.

Materials Cost

The cost of raw materials and components used to create a product.

Ending Work

Typically refers to the working process or inventory that is still in progress at the end of an accounting period.